Capital Ideas Evolving

An industry legend addresses the development of modern investment theory Written by today's foremost financial historian, Peter Bernstein, Capital Ideas Evolving recounts the fascinating process by which financial theory has migrated from the ivory towers of academia to the rough-and-tumble world of Wall Street. This book is a follow-up to Bernstein's landmark work, Capital Ideas (1992), which described the breakthrough financial theories of a small group of academics, including Paul Samuelson, Harry Markowitz, Bill Sharpe, Jack Treynor, Eugene Fama, Robert C. Merton, Fischer Black, and Myron Scholes. Their pioneering insights laid the intellectual groundwork for many of the innovations, new products, and strategies that are revolutionizing today's world of finance. Based on personal interviews with leading academics and pioneering investment practitioners, Capital Ideas Evolving demonstrates how these financial theories now shape the underlying structure of portfolio management and market behavior, sparking important innovations such as portable alpha and fresh insights into the risk/return trade-off. Bernstein also confronts the attack on these theories from researchers in behavioral finance and reveals the positive consequences of the interactions between theoretical critics and investment practitioners. As he deftly traverses between financial theory and the turbulent world of Wall Street, Bernstein brings to life the individuals, ideas, and issues that are transforming the financial landscape. Capital Ideas Evolving is both a history of modern investment theory and a history of modern financial innovation.